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onsemi Reports Record Revenue, Margins, and non-GAAP Earnings per Share for First Quarter 2022

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PHOENIX, May 02, 2022--(BUSINESS WIRE)--onsemi (the "Company") (Nasdaq: ON) today announced results for the first quarter of 2022 with the following highlights:

  • Record revenue of $1,945.0 million, an increase of 31% year-over-year

  • GAAP diluted earnings per share of $1.18 as compared to $0.20 in the quarter a year ago

  • Record non-GAAP diluted earnings per share of $1.22 as compared to $0.35 in the quarter a year ago

  • Record GAAP and non-GAAP gross margin of 49.4 percent increased 1,420 basis points year-over-year

  • Record GAAP operating margin of 33.3% increased 730 basis points quarter-over-quarter and 2,480 basis point year-over-year

  • Record non-GAAP operating margin of 33.9% increased 530 basis points quarter-over-quarter and 2,060 basis points year-over-year

  • LTM free cash flow margin of 20.8%

"Our focused strategy has delivered sustainable results in onsemi’s margin and growth profile with the automotive and industrial end-markets now representing 65% of our revenue. Our record quarterly results with year-over-year growth of 31% in our first quarter revenue, and gross margin expansion of 1,420 bps to a record of 49.4% highlight the strength of our business and the value of our products as we continue our transformation. With a highly differentiated portfolio of intelligent power and sensing products, strong visibility driven by long-term supply agreements, and exposure to secular megatrends of vehicle electrification, ADAS, energy infrastructure, and factory automation, we are well positioned to sustain our momentum," said Hassane El-Khoury, president and CEO of onsemi.

Selected financial results for the quarter are shown below with comparable periods:

GAAP

Non-GAAP

(in millions, except per share data)

Q1 2022

Q4 2021

Q1 2021

Q1 2022

Q4 2021

Q1 2021

Revenue

$1,945.0

$1,846.1

$1,481.7

$1,945.0

$1,846.1

$1,481.7

Gross Margin

49.4 %

45.1 %

35.2 %

49.4 %

45.2 %

35.2 %

Operating Margin

33.3 %

26.0 %

8.5 %

33.9 %

28.6 %

13.3 %

Net Income attributable to onsemi

$530.2

$425.9

$89.9

$538.5

$478.0

$151.3

Diluted Earnings Per Share

$1.18

$0.96

$0.20

$1.22

$1.09

$0.35

Revenue Summary

($ in millions)

(Unaudited)

Three Months Ended

Business Segment

Q1 2022

Q4 2021

Q1 2021

Sequential
Change

Year over
Year Change

PSG

$

986.7

$

953.4

$

747.0

3

%

32

%

ASG

689.3

647.3

531.5

6

%

30

%

ISG

269.0

245.4

203.2

10

%

32

%

Total

$

1,945.0

$

1,846.1

$

1,481.7

5

%

31

%

SECOND QUARTER 2022 OUTLOOK

The following table outlines onsemi's projected second quarter of 2022 GAAP and non-GAAP outlook.

Total onsemi
GAAP

Special
Items **

Total onsemi
Non-GAAP***

Revenue

$1,965 to $2,065 million

-

$1,965 to $2,065 million

Gross Margin

48.5% to 50.5%

-

48.5% to 50.5%

Operating Expenses

$330 to $345 million

$25 million

$305 to $320 million

Other Income and Expense (including interest expense), net

$20 to $24 million

-

$20 to $24 million

Diluted Earnings Per Share

$1.13 to $1.25

$0.07

$1.20 to $1.32

Diluted Shares Outstanding *

450 million

7 million

443 million

*

Diluted shares outstanding can vary as a result of, among other things, the actual exercise of options or vesting of restricted stock units, the incremental dilutive shares from the Company's convertible senior subordinated notes, and the repurchase or the issuance of stock or convertible notes or the sale of treasury shares. In periods when the quarterly average stock price per share exceeds $20.72 for the 1.625% Notes and $52.97 for the 0% Notes, the non-GAAP diluted share count and non-GAAP net income per share include the anti-dilutive impact of the Company’s hedge transactions issued concurrently with the 1.625% Notes and the 0% Notes, respectively. At an average stock price per share between $20.72 and $30.70 for the 1.625% Notes and $52.97 and $74.34 for the 0% Notes, the hedging activity offsets the potentially dilutive effect of the 1.625% Notes and 0% Notes, respectively. In periods when the quarterly average stock price exceeds $30.70 for the 1.625% Notes, and $74.34 for the 0% Notes, the dilutive impact of the warrants issued concurrently with such notes are included in the diluted shares outstanding. GAAP and non-GAAP diluted share counts are based on either the previous quarter's average stock price or the stock price as of the last day of the previous quarter, whichever is higher.

**

Special items may include: amortization of acquisition-related intangibles; expensing of appraised inventory fair market value step-up; non-recurring facility costs, purchased in-process research and development expenses; restructuring, asset impairments and other, net; goodwill impairment charges; gains and losses on debt prepayment; non-cash interest expense; actuarial (gains) losses on pension plans and other pension benefits; and certain other special items, as necessary. These special items are out of our control and could change significantly from period to period. As a result, we are not able to reasonably estimate and separately present the individual impact or probable significance of these special items, and we are similarly unable to provide a reconciliation of the non-GAAP measures. The reconciliation that is unavailable would include a forward-looking income statement, balance sheet and statement of cash flows in accordance with GAAP. For this reason, we use a projected range of the aggregate amount of special items in order to calculate our projected non-GAAP operating expense outlook.

***

We believe these non-GAAP measures provide important supplemental information to investors. We use these measures, together with GAAP measures, for internal managerial purposes and as a means to evaluate period-to-period comparisons. However, we do not, and you should not, rely on non-GAAP financial measures alone as measures of our performance. We believe that non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when taken together with GAAP results and the reconciliations to corresponding GAAP financial measures that we also provide in our releases, provide a more complete understanding of factors and trends affecting our business. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures, even if they have similar names.

TELECONFERENCE

onsemi will host a conference call for the financial community at 9 a.m. Eastern Time (ET) on May 2, 2022 to discuss this announcement and onsemi’s 2022 first quarter results. The Company will also provide a real-time audio webcast of the teleconference on the Investor Relations page of its website at http://www.onsemi.com. The webcast replay will be available at this site approximately one hour following the live broadcast and will continue to be available for approximately 30 days following the conference call. Investors and interested parties can also access the conference call via telephone by dialing (877) 356-3762 (U.S./Canada) or: (262) 558-6155 (International). In order to join this conference call, you will be required to provide the Conference ID Number – which is 4798617.

About onsemi

onsemi (Nasdaq: ON) is driving disruptive innovations to help build a better future. With a focus on automotive and industrial end-markets, the company is accelerating change in megatrends such as vehicle electrification and safety, sustainable energy grids, industrial automation, and 5G and cloud infrastructure. With a highly differentiated and innovative product portfolio, onsemi creates intelligent power and sensing technologies that solve the world’s most complex challenges and leads the way in creating a safer, cleaner, and smarter world.

onsemi and the onsemi logo are trademarks of Semiconductor Components Industries, LLC. All other brand and product names appearing in this document are registered trademarks or trademarks of their respective holders. Although the Company references its website in this news release, information on the website is not to be incorporated herein.

This document includes "forward-looking statements," as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated in this document could be deemed forward-looking statements, particularly statements about the future financial performance of onsemi, including financial guidance for the year ending December 31, 2022. Forward-looking statements are often characterized by the use of words such as "believes," "estimates," "expects," "projects," "may," "will," "intends," "plans" or "anticipates" or by discussions of strategy, plans or intentions. All forward-looking statements in this document are made based on our current expectations, forecasts, estimates and assumptions and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. Certain factors that could affect our future results or events are described under Part I, Item 1A "Risk Factors" in the 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 14, 2022 (the "2021 Form 10-K") and from time to time in our other SEC reports. Readers are cautioned not to place undue reliance on forward-looking statements. We assume no obligation to update such information, except as may be required by law. You should carefully consider the trends, risks and uncertainties described in this document, our 2021 Form 10-K and subsequent reports filed with or furnished to the SEC before making any investment decision with respect to our securities. If any of these trends, risks or uncertainties actually occurs or continues, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline, and you could lose all or part of your investment. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

ON SEMICONDUCTOR CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

Quarters Ended

April 1, 2022

December 31,
2021

April 2, 2021

Revenue

$

1,945.0

$

1,846.1

$

1,481.7

Cost of revenue (exclusive of amortization shown below)

983.7

1,013.9

960.5

Gross profit

961.3

832.2

521.2

Gross margin

49.4

%

45.1

%

35.2

%

Operating expenses:

Research and development

156.8

160.6

173.6

Selling and marketing

71.1

70.2

78.9

General and administrative

77.9

83.5

72.4

Amortization of acquisition-related intangible assets

21.3

24.5

25.0

Restructuring, asset impairments and other charges, net

(13.0

)

13.1

42.5

Intangible asset impairment

2.9

Total operating expenses

314.1

351.9

395.3

Operating income

647.2

480.3

125.9

Other income (expense), net:

Interest expense

(21.6

)

(32.0

)

(33.4

)

Interest income

0.4

0.3

0.4

Loss on debt refinancing and prepayment

(2.8

)

Other income

2.1

20.4

4.5

Other income (expense), net

(19.1

)

(14.1

)

(28.5

)

Income before income taxes

628.1

466.2

97.4

Income tax provision

(97.1

)

(39.8

)

(7.1

)

Net income

531.0

426.4

90.3

Less: Net income attributable to non-controlling interest

(0.8

)

(0.5

)

(0.4

)

Net income attributable to ON Semiconductor Corporation

$

530.2

$

425.9

$

89.9

Net income for diluted earnings per share of common stock

$

530.7

$

425.9

$

89.9

Net income per share of common stock:

Basic

$

1.22

$

0.99

$

0.22

Diluted

$

1.18

$

0.96

$

0.20

Weighted average common shares outstanding:

Basic

433.3

431.1

413.4

Diluted

448.9

445.3

445.4

ON SEMICONDUCTOR CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in millions)

April 1, 2022

December 31,
2021

April 2, 2021

Assets

Cash and cash equivalents

$

1,645.1

$

1,352.6

$

1,042.5

Receivables, net

910.7

809.4

683.6

Inventories

1,496.0

1,379.5

1,295.5

Other current assets

315.6

240.1

166.0

Total current assets

4,367.4

3,781.6

3,187.6

Property, plant and equipment, net

2,559.4

2,524.3

2,489.4

Goodwill

1,936.7

1,937.5

1,663.4

Intangible assets, net

474.5

495.7

441.1

Deferred tax assets

349.3

366.3

447.2

Other assets

525.1

520.6

401.7

Total assets

$

10,212.4

$

9,626.0

$

8,630.4

Liabilities, Non-Controlling Interest and Stockholders’ Equity

Accounts payable

$

725.3

$

635.1

$

605.0

Accrued expenses and other current liabilities

670.4

747.6

588.3

Current portion of long-term debt

170.4

160.7

536.7

Total current liabilities

1,566.1

1,543.4

1,730.0

Long-term debt

3,035.4

2,913.9

2,806.9

Deferred tax liabilities

40.9

43.2

53.9

Other long-term liabilities

552.0

521.1

390.0

Total liabilities

5,194.4

5,021.6

4,980.8

ON Semiconductor Corporation stockholders’ equity:

Common stock

6.1

6.0

5.8

Additional paid-in capital

4,533.3

4,633.3

4,161.0

Accumulated other comprehensive loss

(26.4

)

(40.6

)

(55.9

)

Accumulated earnings

2,992.4

2,435.1

1,515.4

Less: Treasury stock, at cost

(2,507.2

)

(2,448.4

)

(1,996.7

)

Total ON Semiconductor Corporation stockholders’ equity

4,998.2

4,585.4

3,629.6

Non-controlling interest

19.8

19.0

20.0

Total stockholders' equity

5,018.0

4,604.4

3,649.6

Total liabilities and stockholders' equity

$

10,212.4

$

9,626.0

$

8,630.4

ON SEMICONDUCTOR CORPORATION

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

(in millions)

Quarters Ended

April 1, 2022

December 31,
2021

April 2, 2021

Cash flows from operating activities:

Net income

$

531.0

$

426.4

$

90.3

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

140.6

140.3

153.4

(Gain) loss on sale and disposal of fixed assets

(16.6

)

2.8

0.3

Amortization of debt discount and issuance costs

3.2

2.7

2.4

Share-based compensation

22.5

27.2

22.3

Non-cash interest on convertible notes

7.1

4.6

Non-cash asset impairment charges

6.7

6.1

Change in deferred tax balances

38.3

22.9

(23.2

)

Other

0.5

1.8

(2.0

)

Changes in assets and liabilities

(247.6

)

(4.6

)

(35.7

)

Net cash provided by operating activities

$

478.6

$

626.6

$

218.5

Cash flows from investing activities:

Purchase of Property, Plant and Equipment ("PP&E")

$

(173.8

)

$

(169.6

)

$

(77.0

)

Deposits and proceeds from sale of PP&E

36.7

7.4

0.2

Deposits utilized (made) for purchase of PP&E

1.6

(25.9

)

(0.4

)

Divestiture of business, net of cash transferred and deposits received

12.9

3.6

Purchase of business, net of cash acquired

(2.4

)

(399.4

)

Purchase of available-for-sale securities

(7.8

)

(5.1

)

Proceeds from sale or maturity of available-for-sale securities

3.4

1.4

Net cash used in investing activities

$

(129.4

)

$

(587.6

)

$

(77.2

)

Cash flows from financing activities:

Proceeds for the issuance of common stock under the ESPP

$

7.8

$

5.0

$

6.6

Payment of tax withholding for RSUs

(58.8

)

(4.7

)

(28.5

)

Repayment of borrowings under debt agreements

(4.1

)

(51.7

)

(154.1

)

Payments related to prior acquisition

(0.2

)

(2.1

)

Dividend to non-controlling shareholder

(2.2

)

Net cash used in financing activities

$

(57.3

)

$

(51.6

)

$

(178.1

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(0.7

)

(0.3

)

(0.8

)

Net increase (decrease) in cash, cash equivalents and restricted cash

291.2

(12.9

)

(37.6

)

Beginning cash, cash equivalents and restricted cash

1,377.7

1,390.6

1,081.5

Ending cash, cash equivalents and restricted cash

$

1,668.9

$

1,377.7

$

1,043.9

ON SEMICONDUCTOR CORPORATION

RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES

(in millions, except per share and percentage data)

...

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